Canadian Solar (CSIQ)

The market for solar module products is competitive and
continually evolving. We compete with international companies
such as SunPower, First Solar, BP Solar, Sharp Solar and REC and
China-based companies such as Suntech, Yingli and Trina. Many of
our competitors are also developing or currently producing
products based on alternative solar technologies such as thin
film photovoltaic materials that may ultimately have costs
similar to, or lower than, our projected costs. For example,
solar modules produced using thin film materials, such as
amorphous silicon, cadmium telluride and CIGS technology, are
generally less efficient, with conversion efficiencies ranging
from 5% to 10.8% according to Solarbuzz, but require
significantly less or no silicon to produce than crystalline
silicon solar modules, such as our products, and are less
susceptible to increases in silicon costs. Some of our
competitors have also become vertically integrated, from
upstream polysilicon manufacturing to solar system integration.
We may also face competition from semiconductor manufacturers,
several of which have already announced their intention to start
production of solar modules. In addition, the solar power market
in general competes with other sources of renewable and
alternative energy and conventional power generation. We believe
that the key competitive factors in the market for solar module
products include:



customer relationships and distribution channels;



brand name and reputation;



power efficiency and performance;



price;



supply chain management;



manufacturing efficiency; and



aesthetic appearance of solar module products.

In the immediate future, we believe that the ability to compete
in our industry will depend on the ability to develop and
maintain a strong brand name based on high quality products and
strategic relationships with downstream customers. It will also
depend on our ability to effectively manage our cash flow and
balance sheet to maintain our financial health and relationships
with the financial institutions that fund solar projects.
Consolidation of the solar industry is already occurring and is
expected to continue in the near future. We believe that such
consolidation will benefit our company in the long term. We
believe that the key to competing successfully will be sales and
marketing activities. We believe that the strong relationships
that we are building with both customers and suppliers will
support us in that new competitive environment.

The market for solar module products is competitive and
continually evolving. We compete with international companies
such as BP Solar, Sharp Solar and SolarWorld and companies
located in China such as Suntech Power Holdings Co., Ltd.,
Yingli Green Energy Holding Company Limited, Solarfun Power
Holdings Co., Ltd. and Trina Solar Limited. Many of our
competitors are also developing or currently producing products
based on alternative solar technologies such as thin film
photovoltaic materials that may ultimately have costs similar
to, or lower than, our projected costs. For example, solar
modules produced using thin film materials, such as amorphous
silicon, cadmium telluride and CIGS technology, are generally
less efficient, with conversion efficiencies ranging from
5% to 10% according to Solarbuzz, but require significantly
less silicon to produce than crystalline silicon solar modules,
such as our products, and are less susceptible to increases in
silicon costs. Some of our competitors have also become
vertically integrated, from upstream polysilicon manufacturing
to solar system integration. We may also face competition from
semiconductor manufacturers, several of which have already
announced their intention to start production of solar modules.
In addition, the solar power market in general competes with
other sources of renewable and alternative energy and
conventional power generation. We believe that the key
competitive factors in the market for solar module products
include:



supply chain management;



strength of supplier relationships;



manufacturing efficiency;



power efficiency and performance;



price;



customer relationships and distribution channels;



brand name and reputation; and



aesthetic appearance of solar module products.

In the immediate future, because of the growing demand for solar
module products and the shortage of high-purity silicon, we
believe that the ability to compete in our industry will
continue to depend on the ability to effectively manage the
supply chain and form strategic relationships. Consolidation of
the segments of the solar power supply chain is already
occurring and is expected to continue in the near future. We,
however, believe consolidation of the industry will benefit our
company in the long term. We believe that as the supply of
high-purity silicon stabilizes, the key to competing
successfully will shift to more traditional sales and marketing
activities. We believe that the strong relationships that we are
building now with both suppliers and customers will support us
in that new competitive environment when the time arrives.

The market for solar module products is competitive and
continually evolving. We compete with international companies
such as BP Solar, Sharp Solar and SolarWorld and companies
located in China such as Suntech Power Holdings Co., Ltd. While
crystalline technology currently accounts for 94.0% of the solar
power market, many of our competitors are also developing or
currently producing products based on alternative solar
technologies such as thin film photovoltaic materials that may
ultimately have costs similar to, or lower than, our projected
costs. For example, solar modules produced using thin film
materials, such as amorphous silicon and cadmium telluride, are
generally less efficient, with conversion efficiencies ranging
from 5% to 10% according to Solarbuzz, but require significantly
less silicon to produce than crystalline silicon solar modules,
such as our products, and are less susceptible to increases in
silicon costs. Some of our competitors have also become
vertically integrated, from upstream silicon wafer manufacturing
to solar system integration. We may also face competition from
semiconductor manufacturers, several of which have already
announced their intention to start production of solar modules.
In addition, the solar power market in general competes with
other sources of renewable and alternative energy and
conventional power generation. We believe that the key
competitive factors in the market for solar module products
include:



supply chain management;



strength of supplier relationships;



manufacturing efficiency;



power efficiency and performance;



price;



customer relationships and distribution channels;



brand name and reputation; and



aesthetic appearance of solar module products.

In the immediate future, because of the growing demand for solar
module products and the shortage of high-purity silicon, we
believe that the ability to compete in our industry will
continue to depend on the ability to effectively manage the
supply chain and form strategic relationships. Consolidation of
the segments of the solar power supply chain is already
occurring and is expected to continue in the near future. In the
fourth quarter of 2006 and the first quarter of 2007, some
smaller solar module producers cleared their inventory prior to
their exits of the market and caused periodic price instability
in the short time. We, however, believe consolidation of the
industry will benefit our company in the long term. We believe
that as the supply of high-purity silicon stabilizes, the key to
competing successfully will shift to more traditional sales and
marketing activities. We believe that the strong relationships
that we are building now with both suppliers and customers will
support us in that new competitive environment when the time
arrives.